Hero's Image

Bitcoin's true impact: A new study points to an improving narrative for ESG-focused investors




  • A recent report from KPMG highlights some of the common misconceptions about Bitcoin’s relationship to environmental, social, and governance (ESG) considerations.  

  • The authors point out that Bitcoin is incentivizing the development of renewable energy, promoting financial inclusion, and is designed with strong governance protocols. 

  • The report underscores our belief that bitcoin adoption will continue to accelerate as myths are dispelled and institutions get more comfortable with the technology. 




For the past five years, most of the mainstream consensus around Bitcoin and ESG has been "Bitcoin is bad because it consumes too much energy." As a result, many investors have blacklisted Bitcoin as a de facto non-ESG compliant asset.

The reality, however, is that Bitcoin and ESG are not antonymous. This is a perspective supported by a recent study from KPMG, Bitcoin's role in the ESG imperative, which provides a much more fact-based and nuanced take than what is often seen in the media. 

One of the most important points in the paper is that perspective matters when looking at Bitcoin’s energy use (for more on this topic see our article on bitcoin mining). For example, the gold industry generates 50% more CO2 emissions than BTC, while television networks generate 500% more emissions. Yet, investors have seldom divested from or blacklisted gold, TV manufacturers, cable networks, or data centers because of their carbon emissions. What they have done is (i) encourage these industries to become more sustainable and (ii) push them to buy carbon credits to neutralize their carbon footprint. Both of these levers apply to bitcoin.



Source: KPMG, Bitcoin’s role in the ESG imperative



The KPMG study also makes the ESG case for Bitcoin with some informative perspectives:

  • Environmental: Bitcoin mining is incentivizing the development of renewable energy systems, as bitcoin miners act as energy buyers of last resort. Mining also helps reduce greenhouse gas emissions by repurposing flared gas from methane burning as an energy source. We have referenced separate research in the past that found that Bitcoin consumes 56 times less energy than the traditional payments industry and a single Proof-of-Work transaction is 1 to 5 times more energy efficient than traditional payment transactions1.

  • Social: The percentage of crypto used in illicit and illegal transactions is 0.24%, a tiny fraction when compared to the 2% - 5% of global GDP used for money laundering. Bitcoin also enables better remittances and cross-border payments (more convenient, cheaper, and/or faster) and financial inclusion by democratizing access to wallets to receive, send, or store value as a censorship-resistant alternative to repressive governments in many countries.

  • Governance: This is an obvious strong point of Bitcoin compared to many existing monetary systems because Bitcoin is a decentralized network with known rules built into the code/system (“code is law”) that can't be abused or changed by individual participants.


Overall, on all three dimensions there are very sensible arguments to be made for Bitcoin. While the E factor, BTC’s environmental footprint, is usually a sticking point, there are drivers that could put investors at ease when it comes to these concerns, including:

  • There is a clear trend towards the use of sustainable energy sources (renewable and nuclear) in bitcoin mining that will continue to drive the environmental footprint of mining lower: Earlier this year we wrote about this, highlighting that as of January 2022, approximately 53% of the total electricity used already came from sustainable sources, with 1% coming from flare-gas and 11% derived from renewable off-grid energy usage. 

  • Some crypto companies are actively engaged in offsetting the carbon footprint of their BTC holdings. Since 2021, Hashdex has partnered with Germany’s Crypto Carbon Ratings Institute to produce an annual report on the energy consumption and carbon emissions of the Hashdex Nasdaq Bitcoin ETF, a product in which we use a portion of management fees to buy carbon credits to reach carbon neutrality.


Assuming a similar environmental footprint, bitcoin is likely to have a better ESG score than many traditional assets driven by the S and G. For instance, compared to precious metals such as gold or silver, bitcoin will score higher on the S (it's easier to access and cheaper to transact in than gold and silver) and G (it’s more decentralized and transparent than the gold and silver industries). So if ESG-concerned investors are comfortable with large investments in gold and silver, they certainly have no reason to dismiss bitcoin as an investment.   

Our team at Hashdex believes the days when institutional investors considered bitcoin mining a deal-breaker to allocate to crypto are over. Any intellectually honest ESG-motivated critiques of bitcoin as an investment should be supported by a rigorous analysis across the ESG factors, not simply focused on the E. Even so, a fuller understanding of bitcoin’s environmental impact should take into account the new dynamics on mining and the mitigation tools, such as carbon offsets, addressing its environmental footprint.

A month ago, BlackRock CEO Larry Fink publicly said “bitcoin is digitizing gold and has a role in portfolios.” The KPMG report, on the heels of BlackRock and other large institutional commitments to this space, is another sign that institutional adoption of bitcoin continues to gather steam. The acceptance of bitcoin by institutions is something we have anticipated for many years, and we are glad that the market consensus—on both a strengthening investment case for bitcoin and a more nuanced ESG conversation—are converging to the benefit of investors.  


1 Khazzaka, Michel; “Bitcoin: Cryptopayments Energy Efficiency,” April 20, 2022.


This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds. The information and conclusions contained in this material may be changed at any time, without prior notice. Nothing contained herein constitutes an offer, solicitation or recommendation regarding any investment management product or service. This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Hashdex to any registration or licensing requirements within such jurisdiction. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Hashdex. By receiving or reviewing this material, you agree that this material is confidential intellectual property of Hashdex and that you will not directly or indirectly copy, modify, recast, publish or redistribute this material and the information therein, in whole or in part, or otherwise make any commercial use of this material without Hashdex’s prior written consent. 

Investment in any investment vehicle and cryptoassets is highly speculative and is not intended as a complete investment program. It is designed only for sophisticated persons who can bear the economic risk of the loss of their entire investment and who have limited need for liquidity in their investment. There can be no assurance that the investment vehicles will achieve its investment objective or return any capital. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that the Hashdex s investment methodology or that investing any of the protocols or tokens listed in the Information may be considered “conservative,” “safe,” “risk free,” or “risk averse.”

Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Hashdex, and Hashdex does not assume responsibility for the accuracy of such information. Hashdex does not provide tax, accounting or legal advice. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue”  “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results, the ultimate business or activities of Hashdex and its investment vehicles or the actual performance of Hashdex, its investment vehicles, or digital tokens may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward- looking statements in making their investment decisions. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of Hashdex’s investment vehicles or the adequacy of the information contained herein.

Logo Hashdex
The material contained on this website is for informational purposes only and Hashdex, and its affiliates, is not soliciting any action based upon such material. The material is not to be construed as investment advice nor is it to be construed as recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy. Further, the material contained on this website does not constitute a representation that the financial instruments described therein are suitable or appropriate for any person. Past performance is not an indication of any future performance. This website may contain advertising of financial products.